Economics concepts worksheet with answers

Real GDP differs from nominal GDP because real GDP:

1. AExcludes government spending
2. BIs adjusted for changes in the price level
3. CIs measured in a foreign currency
4. DIncludes only goods, not services

A good for which demand rises when income rises is called:

1. AA normal good
2. BA public good
3. CAn inferior good
4. DA Giffen good

Macroeconomics studies:

1. AThe accounts of a single company
2. BThe decisions of individual households and firms in particular markets
3. COnly the stock market
4. DThe economy as a whole, such as inflation, unemployment and growth

In perfect competition in the long run, firms earn:

1. ALosses forever
2. BZero economic profit
3. CMonopoly profits
4. DLarge economic profits

A sharp rise in world oil prices leading to higher inflation is an example of:

1. ADeflation
2. BDemand-pull inflation
3. CCost-push inflation
4. DDisinflation

In the long run in monopolistic competition, firms typically:

1. AEarn large economic profits protected by entry barriers
2. BProduce at the minimum of average total cost
3. CEarn zero economic profit and have excess capacity
4. DCharge a price equal to marginal cost

The principal–agent problem arises when:

1. AThe government owns a firm
2. BTwo firms agree to fix prices
3. CAn agent acting for a principal has different goals and the principal cannot fully monitor them
4. DA buyer and seller have identical information

The "convergence hypothesis" from the Solow model predicts that:

1. APoorer countries with similar fundamentals tend to grow faster than richer ones
2. BRich countries always grow faster than poor ones, because they have more capital
3. CAll countries will eventually have the same population
4. DExchange rates converge to a fixed value